Plains All American: Backwardation Might Ruin The Party

Bashar Issa7.19K FollowersFollow5ShareSavePlay(11min)Comment(1)SummaryGeopolitical tensions have driven oil prices higher and created market backwardation, testing PAA's reduced reliance on arbitrage and trading revenues.PAA's EBITDA guidance for FY'26 is $2.75B, but higher oil prices could lift this to $2.84B, supporting a bullish rating at an 11.5x EV/EBITDA multiple.Despite recent share gains, potential downside exists if lost arbitrage revenue outweighs contract tailwinds amid ongoing market disruptions. Naeblys/iStock via Getty Images Investment Thesis In the past few years, Plains All American Pipeline, L.P. Common Units (PAA)(PAGP) told investors that it decreased its reliance on arbitrage and trade-based services to focus on the more stable, contracted, fee-based earnings. In practical terms, thisThis article was written byBashar Issa7.19K FollowersFollowBashar is a contributing writer at Seeking Alpha, focusing on Long/Short investment ideas, with a geographic focus in North America. Before that, Bashar worked at an Investment Fund in the United Kingdom. He has a Master's degree in Finance from the Queen Mary University of London and a Bachelor's degree in Economics from Middlesex University.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.